- The BSE Sensex closed January at 82,269.78 and the Nifty 50 at 25,320.65. Unlike the positive year-end of 2025, January saw a monthly decline of 3.46% (Sensex) and 3.10% (Nifty) as investors booked profits and turned cautious ahead of the February 1st Union Budget.
- Market momentum shifted toward a “defensive” stance. While indices retreated from record highs, sectors like Metals (+5.52%) provided a cushion due to positive news on US-India trade negotiations. However, IT and Banking faced selling pressure due to global tech uncertainty and pre-budget de-risking.
- On the BSE sectoral front, Metal was the standout performer and the only major gainer, up 5.52%. In contrast, other sectors faced downward pressure. The IT sector remained the most stable among the decliners, slipping only 0.33%. The Fast Moving Consumer Goods (FMCG) sector was the major loser for the month, dropping 7.91%, followed by Healthcare, which declined by 5.60%.
- The US Federal Reserve paused its rate-cut cycle in January, keeping the policy range at 3.50%–3.75%. Brent Crude oil prices saw a mid-month spike, averaging between $66 and $68 per barrel (closing the month near $72) due to renewed tensions in the Middle East and South America.
- Foreign Portfolio Investors (FPIs) accelerated their selling, with net equity outflows reaching Rs. 35,962 crores in January, a five-month high. This was triggered by a stronger US Dollar (hitting Rs. 91.70) and global risk aversion, though Domestic Institutional Investors (DIIs) cushioned the fall with record buying of over Rs. 67,000 crores.
- The Nifty’s forward P/E remains at approximately 20x FY27E earnings, aligning with historical averages. Despite the January dip, the long-term outlook remains constructive with a projected 12–13% earnings CAGR, as India maintains its status as the world’s fourth-largest economy.
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
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